Dealing with the challenge of tight cash flow in your business is stressful and can result in an emotional roller coaster as you try to figure out how to make ends meet.

The best solution to dealing with up and down cash flow in your business is to prepare for this income roller coaster ahead of time. The top ten steps I suggest you take to prepare for these low income, tight cash flow months are:

1. Set aside 10% of all business income for making decisions: I call this a ‘Choice Account’. Every time your business gets paid, set 10% of that income into a separate account. Wait 30 days (longer if you don’t have a pressing need for the money). After 30 days set aside time in your busy schedule to sit and review your business and personal expenses, and make decisions about how you can most effectively use this 10%. By waiting 30 days to spend this money (and any savings you have kept in your Choice Account) you will be able to make different decisions about spending than you will during daily business operations (especially if you are panicking about cash flow challenges).

2. Maintain a clear boundary between your business and personal life: open separate bank accounts for your business. If you can, set up separate credit cards or lines of credit for your business. Keep business expenses on the business side, and personal expenses on the personal side. When your business receives money, run that money through the business bank accounts, then pay yourself. Use the money you paid yourself to cover personal expenses. If you ever loan money to your business, write up a loan document and transfer that money officially, then make sure you pay it back.[Read more…]

That post explained how we used the power of small money wins to accumulate $16,000 in savings (and growing) for Ashlea’s degree. However, that post shows an example of small money wins four years into the process.

This week I want to continue discussing the power of small money wins by sharing a brand new example that I just began within my business.

Last month I started transferring 10% of each payment I receive for the Secure Entrepreneur Monthly Money Habit Membership Group into a Kiva.org account.

Kiva is an organization that allows you to put money into an account and then lend that money to help entrepreneurs around the world grow their businesses.

Here is Kiva’s mission statement from their website:

Kiva is an international nonprofit, founded in 2005 and based in San Francisco, with a mission to connect people through lending to alleviate poverty. We celebrate and support people looking to create a better future for themselves, their families and their communities.

These loans can be for any amount, but you can start helping with small loans of only $25. Each small loan accumulates, allowing the entrepreneur in need to build their business.

The entire Kiva process is an amazing example of the power of small money wins![Read more…]

The main road of my town is under construction this spring and summer. My house is on the other side of the chaos and mess (yeah!).

Roads have been closed and detours have been set for almost two weeks now, so I am getting into the flow of navigating through the construction.

Or, at least you would think I am getting into the flow after two weeks of following the detour signs.

But I’m not.

Every time I drive, I head up the road, and without thinking, hit my signal light and turn left into construction and a barricade across the road.

I decided I needed a new strategy. Now, as I drive up the road I start repeating to myself, “don’t turn, don’t turn, don’t turn.”

And you know what? Over 50% of the time I still make that left turn, or, at the very least, I turn on my signal light and my wife calmly reminds me “don’t turn here”.

(Since starting to write this post, my son now helps me out as I drive by repeating “don’t turn Daddy, don’t turn Daddy, don’t turn Daddy)

Even when I expend energy trying to remember the construction, something else in my brain takes over and I repeat my routine of the past seven years.

I have a deeply ingrained habit, locked into my brain, to turn left on 2nd Avenue.

Put your basal ganglia to work for your business.This little driving/construction challenge has really made me realize how strong this habit is. My Basal Ganglia (the part of the brain responsible for habits) is 100% fully in control.

And, it turns out, that is a good thing!

My habits save me a ton of energy each day by not having to think about them. Energy I can use for all of the other things I need to get done that do need energy and more direct attention.[Read more…]